function calculateGDPGrowth() {
// Get input values
var prevGDPValue = parseFloat(document.getElementById('prevGDP').value);
var currGDPValue = parseFloat(document.getElementById('currGDP').value);
var resultDiv = document.getElementById('gdpResult');
// Validate inputs
if (isNaN(prevGDPValue) || isNaN(currGDPValue)) {
resultDiv.innerHTML = "Please enter valid numerical values for both periods.";
return;
}
if (prevGDPValue === 0) {
resultDiv.innerHTML = "Previous period GDP cannot be zero for growth calculation.";
return;
}
// Calculate Growth Rate Formula: ((Current – Previous) / Previous) * 100
var growthRateDecimal = (currGDPValue – prevGDPValue) / prevGDPValue;
var growthRatePercentage = growthRateDecimal * 100;
// Format result
var formattedResult = growthRatePercentage.toFixed(2) + "%";
var message = "";
if (growthRatePercentage > 0) {
message = "The Nominal GDP grew by " + formattedResult + ".";
} else if (growthRatePercentage < 0) {
message = "The Nominal GDP contracted by " + formattedResult + ".";
} else {
message = "There was no change in the Nominal GDP (0.00% growth).";
}
// Display result
resultDiv.innerHTML = message;
}
Understanding Nominal GDP Growth Rate
Gross Domestic Product (GDP) is one of the primary indicators used to gauge the health of a country's economy. It represents the total dollar value of all goods and services produced over a specific time period without adjusting for inflation.
The Nominal GDP Growth Rate measures the percentage change in this value from one period to the next. Unlike "Real GDP," nominal figures are not adjusted for price changes (inflation or deflation). Therefore, Nominal GDP growth reflects both increased production volume and increases in prices.
Why Calculate Nominal GDP Growth?
While Real GDP is often preferred for understanding actual economic output versus price changes, Nominal GDP is crucial for understanding the economy in current currency terms. It is often used in debt-to-GDP ratios and for comparing economic output against current financial metrics.
The Formula
The calculator above uses the standard percentage change formula to determine the growth rate:
Growth Rate = ((Current Period GDP – Previous Period GDP) / Previous Period GDP) × 100
Example Calculation
Let's assume we want to calculate the Nominal GDP growth of an economy from Year 1 to Year 2.
Previous Period GDP (Year 1): $20.50 Trillion
Current Period GDP (Year 2): $21.43 Trillion
Using the formula:
((21.43 – 20.50) / 20.50) * 100
(0.93 / 20.50) * 100
0.04536 * 100 = 4.54%
In this example, the economy experienced a 4.54% growth in nominal terms between Year 1 and Year 2.